02 Apr Platform Insights: How the warmer winter affected kerosene sales
With last year’s ‘beast from the east’ becoming a distant memory and warmer weather now welcoming in Spring, we have decided to take a look at kerosene trends we noticed throughout these past two winters.
2017/18 was epic. Everyone agrees with it. Who could have expected the extremities of winter in March? Cold weather and snow stopped roads, people couldn’t get to work, supply chains crashed… However, all of this meant that kerosene sales were soaring. So it comes as no surprise that everyone was getting ready with their kerosene supplies for this recent winter as well. But although we had some cold spells during January, some parts of the UK were experiencing 20°C in February!
So with all this in mind, we have decided to have a quick look at the correlation between average temperatures and kerosene demand in the UK. The results, which may seem obvious for some, are definitely worth sharing with you all…
In the table below you can see how much kerosene contributed to the total volume traded through OnlineFuels during winter months (Dec-March) for both 2017/18 and 2018/19. You can also see the average monthly temperatures in London* as a point for comparison.
So from all of this, it is clear to say that kerosene demand is indirectly proportional to average temperature. And while this sounds too academic, let us explain it in more simple terms and give you some more visual data to fully understand.
When the temperature increases, kerosene forms a smaller part of the total volume of fuel purchased than that when the temperature is lower. Thus comparing 2017/18 to 2018/19, we see that with increased average temperature, kerosene percentage decreased by more than 25% for March! February volume also saw a downturn in volume share from 73% to 56% due to the average temperature increasing by more than 4°C compared to the previous year. Alternatively, January 2019 was slightly colder than January 2018, thus we see a shift in increased kerosene volume share compared to the previous year.
So from the trend lines in the graph and the conversations we have been having with you all, it’s clear that March wasn’t as kerosene demanding as expected all due to increased temperatures and warmer weather across the country throughout the whole winter. So what does it mean for your business and planning kerosene volumes for next winter to come?
Although this is probably a whole new topic, these findings raise the question; is contract still the better option? Perhaps with the uncertainty of the weather wreaking havoc with supply and demand. With the new platform being released in May, that boasts functionality that has never been available in the industry before. The ability to compare prices and purchase fuel in a matter of minutes opens up new opportunities that work on your side as the uncertainty of weather and the market bring complications with supply and demand.
At this point, it is hard to say what can we expect from the next winter. However, it is clear that the ‘Beast from the East’ is unpredictable, but sure to happen at some point again- a logistical nightmare for forecasting your fuel volumes. With our new platform underway, we can connect you with multiple new suppliers to solve your volume worries and it will be easier than ever when you can purchase your fuel with the click of a button. Sign up for a demo today!
*History data taken from https://www.metoffice.gov.uk/pub/data/weather/uk/climate/stationdata/heathrowdata.txt with March 2019 averages estimated using previous daily recordings plus predicted temperature for remaining days from https://www.accuweather.com/en/gb/london/ec4a-2/march-weather/328328.